Market watch: Energy futures prices mixed ahead of bullish US stocks report

Energy futures prices were mixed Tuesday ahead of an unexpectedly bullish report of lower US inventories of oil and petroleum products that triggered a price jump when trading resumed Wednesday.

By OGJ editors

HOUSTON, Aug. 14 -- Energy futures prices were mixed Tuesday ahead of an unexpectedly bullish report of lower US inventories of oil and petroleum products that triggered a price jump when trading resumed Wednesday.

Both the September and October contracts for benchmark US light, sweet crudes gained 4¢ each Tuesday to $27.90/bbl and $27.19/bbl, respectively, on the New York Mercantile Exchange. However, unleaded gasoline for September delivery dropped 0.37¢ to 77.38¢/gal, while heating oil for the same month dipped 0.04¢ to 69.42¢/gal.

The September natural gas contract edged up 1¢ to $2.98/Mcf on NYMEX. "The market was lifted by concerns about heat in the Northeast that pushed physical prices there as high as $6/MMbtu," said analysts at Enerfax Daily. Although the September gas contract failed to hold Tuesday at $3/Mcf, they said that it "could see some more upside" during Wednesday's session.

"A technical 'island reversal,' which is a rare trading pattern where price action has exhausted the momentum of a contract's trend, has led to a dearth of price action around $2.64-$2.80(/Mcf), below the present market level and could be interpreted as an important contract bottom or low," explained Enerfax Daily analysts. "It also could suggest an upward move the longer it remains in place."

After the close of NYMEX trading Tuesday, the American Petroleum Institute announced US oil inventories last week plunged by nearly 9.5 million bbl to 295.6 million bbl total. US gasoline stocks also fell 3.9 million bbl to less than 209 million bbl during the same period, while total distillate stocks were down 1.5 million bbl to 133 million bbl.

In London, the September contract for North Sea Brent oil gained 11¢ to $26.15/bbl Tuesday on the International Petroleum Exchange, in anticipation of a drop in US inventories. That position was trading at $26.50/bbl on the IPE early Wednesday, but brokers said it was unlikely to move much higher than that because of longer-term fears of oversupply.

The September natural gas contract increased by 2¢ to the equivalent of $1.93/Mcf Tuesday on the IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes was up 25¢ to $25.62/bbl Tuesday.

Meanwhile, United Nations officials reported Iraq's official oil exports under the UN-administered oil-for-aid program are down sharply. Iraq exported 4.4 million bbl of oil during the week ending Aug. 7, down from 8.4 million the previous week, they said.

The decline of Iraq's oil exports is exacerbating the budget shortfall for the civilian aid program. UN officials reported more than 1,000 contracts for humanitarian supplies—valued at $2.4 billion—have been approved but not yet funded under the aid program.

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